Earlier today I interviewed the Chair of the Consumer Products Safety Commission Nancy Nord about the devastating impacts of the Consumer Products Safety Improvement Act on businesses, and aired it in the first hour today. The audio is available here.

HH: Pleased to welcome now to the Hugh Hewitt Show Chairman Nancy Nord of the Consumer Product Safety Commission. Chairman Nord, welcome, it’s great to have you on the program.

NN: Well, I’m delighted to have an opportunity to talk with you, Hugh.

HH: Well, let me begin by, the audience has been listening a lot, I’ve had a couple of conversations with lawyer Gary Wolensky of Snell and Wilmer, who represents a lot of people impacted by this, I’ve written about it. The summary is, though, that the Consumer Product Safety Improvement Act, CPSIA, is impacting businesses of all size, and just yesterday, as you probably know, the Toy Industry Association put out a survey of 400 manufacturers, 200 retailers, that puts that industry’s loss at $2 billion dollars. Then there’s sporting goods, power sports vehicles, clothes, shoes, cribs, it’s astonishing. It’s devastating. Can the commission do something like a six or a twelve or an eighteen month delay of the effective dates here, Chairman Nord?

NN: Hugh it really is astonishing, and it is certainly of concern to me. Basically, our agency wants to protect consumers from dangerous products, not penalize businesses who have gotten swept up into this net of unintended consequences. We are doing what we can to ameliorate the effects of this CPSIA on businesses. But there are some issues that we just cannot fix, and Congress is really going to have to step up to the plate here. [# More #]

HH: Congress and the commission are now sort of pointing fingers at each other. I’ve been forwarded e-mails from Senator Durbin’s office to some of the impacted business out there saying it’s up to you guys to grant exemptions. And I’ve read some statements from commission staff saying we don’t have the authority to grant exemptions. You know, so the finger pointing goes on, and the businesses are burning down. What’s happening?

NN: Well, it really is something that we’re very concerned about. Congress passed this very well-intended piece of legislation in response to the recalls of 2007-2008. They did it very quickly, and perhaps did not give sufficient thought to some of the provisions. You raised the exemption provision, and that is a very, very good example of what I’m talking about. Although the legislation indicates that we can give exemptions from the lead provisions of the law, in certain circumstances, those circumstances are very, very limited. And Congress was very precise in telling us when we could give exemptions, and when we could not. And unfortunately, we are now seeing many, many more products that have trace amounts of lead, products that really are not going to harm consumers at all. They’re not unsafe. But they don’t meet the very, very strict standards of the law. And the way the law is written, our hands are tied. So Congress really needs to find, to help us find some wiggle room here, if you will. We’re very hard-pressed to find exclusions from this new law. [# More #]

HH: Now if I were your general counsel, and I have been the general counsel of two federal agencies, OPM and NEH, I’d come in and I’d say to you, Madame Chairman, we’ve got to take a stand here, we’ve got to issue an exemption, for example, to all-terrain vehicles, regardless of the trace amounts of lead, because they’re dying, people are losing their jobs, hundreds of millions of dollars of inventory are lost, and let the chips fall. You’re not going to go to jail, I’m not going to go to jail, but these people are going to go out of business. How do you respond to that?

NN: Well, our job as a regulatory agency is to implement the law that Congress wrote as Congress wrote it. So that is what we need to do. You should be aware, I’m sure you probably are aware that we did try to take a reasonable approach with respect to implementing one of the provisions dealing with a substance called phthalates, which are used in plasticizers. It’s what makes a rubber ducky squeezable, if you will. And a federal district court overturned us and said no, our reading of the law was incorrect, that Congress really intended that everything in inventory, everything on store shelves, things sitting in container ships making their way to this country, they were all outlawed if they were not tested for phthalates. So we’ve tried to implement a reasonable approach here, and so far…

HH: Oh, and by the way, I know about that case…

NN: Yeah.

HH: And I appreciate what you tried to do, but if I were your general counsel, I’d say let’s try it again. Let’s try a different exemption, and make the courts prove to the Congress, because I think this is part of the problem, that Congress doesn’t believe that your hands are tied. You believe your hands are tied, and the only person that can persuade Congress are the courts. So you’ve just got to keep passing exemptions.

NN: You know, when the law was being enacted, the professional career staff of this agency went up and met with the Congressional staff. And with respect to exclusions pointed out to them, very explicitly, that the language that they were using was going to tie our hands, and that we should be able to have at least some sort of de minimus standard with respect to how these exclusions were going to be implemented. The Congressional staff’s response was that is exactly what we mean. We are not looking for a de minimus exclusion standard here. When we say there can be no lead in these products, that’s exactly what we mean.

HH: But can we look at, for example, at the ATV and the power sports and the snowmobiles and the motorbikes?

NN: Yeah.

HH: If you define products as products that actually possibly could pass lead, I mean, do you see how lead could get from an ATV made for a 12 year old or younger, or a snowmobile or motorbike into them? I mean, to me it’s just insane.

NN: Well, it is…I agree in the sense that our staff scientists do not see that there is a risk to children from using these products. But that’s not what the law says. The law says there can be no absorption of any lead, and if you…there is a possibility that as a child uses one of these products, the lead could be on their hands, it could go into their mouths.

HH: Can I, Madame Chairman, I want to press you here a little bit, because…

NN: Yeah.

HH: …I’m urgently concerned about this, because…

NN: Well, we are urgently concerned about it, too, and…

HH: But I mean for a different reason.

NN: I want your listeners to understand that the last thing this agency wants to do right now is impose an unreasonable burden on businesses, especially, especially if it doesn’t relate to safety.

HH: But what’s happening is because of the ban on ATV’s and snowmobiles, parents are putting small children on adult bikes, and the commission knows that those children end up injured, and some kids end up dead.

NN: Hugh, I am so concerned about this problem. The last thing we want is for young children to end up on adult ATV’s, and this is a really, really perverse consequence of this law. But again…

HH: Well, let me pause then. If that’s the case…

NN: We have got to implement the law that Congress wrote.

HH: But Madame Chair…

NN: And I have called on Congress to work with us on changes here…

HH: But I’m going to push you.

NN: …so that the law protects consumers and doesn’t, doesn’t…

HH: With that child in mind, I’m going to push you for a second…

NN: Please.

HH: If in fact you agree with me that that danger is real, and is sounds like you do…

NN: I do.

HH: Why don’t you and the commission issue an exemption and let the courts overturn it so that child when he or she is injured or killed, is not blood on your hands, it’s on that court or the Congress? Why not issue an exemption for ATV’s, snowmobiles, and power sports vehicles?

NN: Well, we are going, we’ve been petitioned for an exemption, and that is coming up for a vote in the next couple of days.

HH: Oh, good. Are you going to vote for it?

NN: I’m going to look at what the technical staff puts in front of me, and consider what the right thing to do it.

HH: Oh, thank you. I’d love…I’ve got no dog in this fight, but I know what these parents are writing me. They’re letting their kids ride these things.

NN: I’m seeing the same things, and believe me, Hugh, I am very, very concerned. Again, what we want to be doing is focusing on products that actually harm consumers, not penalizing businesses who are just really trying to produce products that consumers want. We don’t want to adversely impact consumer choice, we don’t want to make businesses go out of business. What we want to do is protect consumers. And this law has, has presented some challenges for us.

HH: Let me ask you some, for the benefit of the audience, some scale questions. How much inventory, in terms of dollars, do you think manufacturers have had to simply dispose of or put in a warehouse pending any kind of an alleviation of the problem?

NN: Well you know, it’s hard for us to quantify it in absolute terms. We are in the process now of collecting that information. But we’re getting it from individual industries. You mentioned the toy industry, $2 billions dollars, we’ve heard from the apparel people, multi-millions, hundreds of millions of dollars, we’ve heard from the bicycle folks, similar stories. Again, this has had a very, very large impact on businesses that are trying to sell perfectly safe products to consumers.

HH: Do you have any idea how many jobs have been lost as a result of CPSIA?

NN: I do not. I do not.

HH: I’ve gotten a lot of e-mails, you probably have as well…

NN: Indeed.

HH: …from very small businesses, people who make a thousand dollars worth of products, or five thousand dollars worth of products. Now I’ve had big time lawyers on like Wolensky of Snell and Wilmer, and they represent sporting goods and all-terrain vehicles, and they can go argue the case to the commission. But these small timers, they’re just wiped out. Are you getting those e-mails as well?

NN: Well, of course we are. One of the problems with this law, and actually, I think one of the biggest problems with this law, is the fact that it basically is retroactive. It put in place a ban on lead in children’s products, and it applies not only to products manufactured after the effective date of February 10th, but it applies to all products sold in the United States after that date, which pulls in inventory, it pulls in products on store shelves, things that were deemed perfectly safe on February 9th, on February 10th, are deemed to be illegal. And that is perhaps not the best way to regulate. And instead, this agency needs to be looking at products that actually expose consumers to real risks. We’ve always looked at risks and exposure as we have regulated products. But because of the CPSIA, we are now just looking at is the substance there, and if it is, it is deemed to be illegal regardless of whether it poses a risk to consumers.

NN: The law that Congress passed is pretty clear on that. No, it needs to be destroyed in most cases.

HH: There’s no approved test protocol for the lead and the phthalates yet, but still…

NN: There certainly is for lead, and we have published a test protocol for phthalates. The lead testing protocol is reasonably well understood and indeed can be done. There’s a screening test out there that people can use that…

HH: I must have misunderstood, because from what I have read, I thought there was no approved final test protocol.

NN: No, for lead, there is.

HH: But for…

NN: We are working on a final test protocol for phthalates.

HH: Are you requiring…

NN: We have published a proposed one. The problem with the phthalates…

HH: Madame Chairman, just for this, because I get confused, so there’s no final test protocol for phthalates. Are you requiring manufacturers or retailers to still self-certify then that they are meeting the product level?

NN: The legislation says that they cannot sell phthalates, or products with phthalates in it. So they need to comply with the law.

HH: Well, if there’s no final test protocol, if your agency hasn’t put out a test protocol, you’re saying they cannot comply with the law.

NN: No, I’m not saying that at all. We are, we have published a test, a proposed test that people can use, and that we will use to determine whether phthalates are present in a product.

HH: But that’s not the approved…

NN: But the law says that there will be no phthalates in products, and that is the law that we are applying.

HH: But that’s a proposed…you see, I’m an old regulatory lawyer. I know this stuff. And I know if it’s not a final rule, it’s not a final rule, and therefore you’ve got a proposed test out there that has not yet been adopted, has no legal standing yet, and yet so no one can comply with the law. They can hope that they’re complying with the law if they use that. So isn’t your agency forcing them into…

NN: You know, what you have done, Hugh, is put your fingers on yet another problem with this law, and that is that the deadlines and the requirements were put in place in such a quick sequence, that is becomes very, very difficult not only for the agency to get the foundational rules out there in place, but it’s very, very difficult for people that have to comply with these rules to understand them and comment on them, and then comply with them. So we are…

HH: Well, let me conclude…

NN: Everyone is struggling with this.

HH: Let me conclude with, yeah, but you folks are struggling in the government, and I’ve been a government person, a fed for a lot of years. And when you struggle with it, it means you agonize over it, you work hard at it, and you go home.

NN: Well, we’re working with lightning speed by government standards.

HH: I know, but nevertheless, you haven’t lost your life savings, you haven’t lost your business, a child hasn’t been injured or killed because you haven’t done your job. These other people have been, they are living with it. So I’m wondering, I want to go back to the issue of what I call basically adversarial rule making, where your commission sits down, and perhaps even over the advice of your general counsel who’s a nice, career person or a nice, political appointee, say no, we’re going to put it out there. We’re going to give exemptions to ATV’s, we’re going to give exemptions to shoes, we’re going to give exemptions to these phthalates that can’t certify. We’re going to exempt everything, we’re not going to impose the law, and make the courts tell you to do these insane things rather than abet the insanity, Madame Chair. Why not?

NN: Because the commission would need to vote to do that. I am one vote. So consequently, it wouldn’t vote on one vote. The thing that I think you need to understand, and your listeners need to understand, is that the law has been pretty precise in what they have told us to do, and that is what we need to do. Our obligation as a regulatory agency is to implement the CPSIA.

HH: And Madame Chairman, I’ll let you go with this…

NN: Now as we have gone through this process, we have found that there are some real problems here. We have brought them to the attention of Congress. I would hope that we can work with Congress to solve these problems as quickly as we possibly can, because the last thing that we want to do, that I want to do, is to impose economic havoc on businesses that are really just trying to provide safe products to the consumers.

HH: Madame Chair, I appreciate the time, but I hope you tell your fellow colleagues that the gig is up. People know that children are at danger because of this law, and they know that businesses are closing and hundreds of thousands of jobs are lost…

NN: Yeah.

HH: And billions of dollars are wasted in the middle of a recession, and that the commission is worrying about the word any. I mean, I’m just astonished. I know you have, you’ve got hearts in the right place, but if I were you and your fellow colleagues, I’d worry about that mother or that father of that dead kid coming in front of you and saying you knew this was going to happen, and you didn’t challenge them in court.

NN: And Hugh, I worry about that every day, and the folks here at the CPSC do as well. We are struggling to implement a law that has got some real problems with it. There have been many unintended consequences that have flowed from this law. We are trying to ameliorate the bad effects while still protecting consumers, but we are going to need to work with Congress, with businesses, with consumer groups, and with opinion leaders like you to bring that about, so I very much appreciate your interest in this subject.

HH: Chairman Nord, I really appreciate your being willing to come on and engage in the tough conversation, the pointed questions, and I wish everyone in the government were so inclined. Thanks for your time this afternoon.